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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Market Equilibrium
Monopsonist
Constant cost industry
Resources
2. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Relative Prices
Perfectly elastic
Substitute Goods
Economies of Scale
3. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Income Elasticity
Constrained Utility Maximization
Decreasing Cost industry
Implicit costs
4. Ei > 1
Total Revenue
Law of Increasing Costs
Excise Tax
Luxury
5. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Least-Cost Rule
Price Ceiling
Utility Maximizing Rule
Law of Supply
6. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Marginal Product of Labor (MPL)
Total Fixed Costs (TFC)
Income Effect
Negative externality
7. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Break-even Point
Spillover benefits
Monopolistic competition
Consumer surplus
8. Costs that change with the level of output. If output is zero - so are TVCs.
Perfectly inelastic
Monopolistic competition long-run equilibrium
Total variable costs (TVC)
Total Welfare
9. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Law of Increasing Costs
Private goods
Increasing Cost Industry
Total Revenue Test
10. Models where firms agree to mutually improve their situation
Complementary Goods
Long Run
Collusive oligopoly
Determinants of Demand
11. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Total Revenue Test
Subsidy
Marginal Resource Cost (MRC)
Negative externality
12. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Break-even Point
Monopsonist
Decreasing Cost industry
Four-firm concentration ratio
13. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Total Fixed Costs (TFC)
Diseconomies of Scale
Least-Cost Rule
Relative Prices
14. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Positive externality
Marginal Product of Labor (MPL)
Marginal Resource Cost (MRC)
Private goods
15. Ei = (%dQd good X)/(%d Income)
Accounting Profit
Shutdown Point
Income Elasticity
Increasing Cost Industry
16. When firms focus their resources on production of goods for which they have comparative advantage
Non-collusive oligopoly
Average Fixed Cost (AFC)
Specialization
Monopsonist
17. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Variable inputs
Surplus
Constrained Utility Maximization
Determinants of Demand
18. All firms maximize profit by producing where MR = MC
Total Revenue Test
Profit Maximizing Rule
Average Total Cost (ATC)
Price Elasticity of Supply
19. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Monopolistic competition
Increasing Cost Industry
Constant Returns to Scale
Long Run
20. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Substitution Effect
Utility Maximizing Rule
Perfect competition
Normal Goods
21. The price of a good measured in units of currency
Absolute prices
Constrained Utility Maximization
Price Ceiling
Allocative Efficiency
22. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Natural Monopoly
Economic Growth
Monopolistic competition long-run equilibrium
Profit Maximizing Rule
23. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Marginal Revenue Product (MRP)
Spillover benefits
Oligopoly
Price Ceiling
24. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Total Product of Labor (TPL)
Determinants of Labor Demand
Oligopoly
Derived Demand
25. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Surplus
Marginal Product of Labor (MPL)
Marginal Productivity Theory
Private goods
26. The output where ATC is minimized and economic profit is zero
Collusive oligopoly
Break-even Point
Total Welfare
Consumer surplus
27. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Spillover costs
Positive externality
Break-even Point
Price elastic demand
28. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Fixed inputs
Determinants of Supply
Relative Prices
Monopoly long-run equilibrium
29. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Total Revenue
Four-firm concentration ratio
Relative Prices
Surplus
30. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Monopoly
Utility Maximizing Rule
Allocative Efficiency
Law of Demand
31. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Market Economy (Capitalism)
Spillover benefits
Incidence of Tax
Explicit costs
32. The additional benefit received from the consumption of the next unit of a good or service
Normal Goods
Marginal Benefit (MB)
Spillover benefits
Private goods
33. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Normal Profit
Demand for Labor
Natural Monopoly
Constant cost industry
34. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Economic Profit
Free-Rider Problem
Constrained Utility Maximization
Oligopoly
35. Occurs when LRAC is constant over a variety of plant sizes
Positive externality
Constant Returns to Scale
Excess Capacity
Marginal Benefit (MB)
36. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Economies of Scale
Monopolistic competition long-run equilibrium
Opportunity Cost
Perfectly elastic
37. Exists if a producer can produce a good at lower opportunity cost than all other producers
Comparative Advantage
Total Revenue
Normal Goods
Market Equilibrium
38. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Excess Capacity
Shutdown Point
Positive externality
Excise Tax
39. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Luxury
Price elasticity
Economics
Substitution Effect
40. The practice of selling essentially the same good to different groups of consumers at different prices
Luxury
Price discrimination
Relative Prices
Excess Capacity
41. A firm that has market power in the factor market (a wage-setter)
Monopsonist
Comparative Advantage
Total Welfare
Marginal Product of Labor (MPL)
42. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Substitution Effect
Collusive oligopoly
Producer surplus
Excess Capacity
43. The ability to set the price above the perfectly competitive level
Cross-Price Elasticity of Demand
Market power
Law of Increasing Costs
Price Ceiling
44. Es = (%dQs) / (%dPrice)
Price Elasticity of Supply
Marginal Product of Labor (MPL)
Price Ceiling
Normal Profit
45. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Marginal Product of Labor (MPL)
Monopolistic competition
Law of Diminishing Marginal Utility
Private goods
46. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Monopoly
Price discrimination
Law of Supply
Marginal Productivity Theory
47. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Allocative Efficiency
Complementary Goods
Profit Maximizing Resource Employment
Monopolistic competition
48. Product demand - productivity - prices of other resources - and complementary resources
Variable inputs
Constrained Utility Maximization
Determinants of Labor Demand
Luxury
49. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Private goods
Determinants of Supply
Monopolistic competition long-run equilibrium
Allocative Efficiency
50. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Private goods
Short run
Marginal Analysis
Market Equilibrium